L'Oréal - 2018 Registration Document

Corporate Governance RISK FACTORS AND CONTROL ENVIRONMENT

the Group to the financial markets. This timetable complies with the requirements of market authorities. These managers ensure, with the assistance of the Legal Department, that communications are made within the required deadlines and in accordance with laws and regulations, which they constantly monitor. Their role is also to publish, precisely and accurately, the information provided by the Operational Finance Department and the Legal Department. All material information provided to the financial community reflects with truth and transparency the situation and activities of the Group and the process is carried out in accordance with the principle of equal provision of information to all shareholders. The Statutory Auditors All accounting and financial information prepared by consolidated subsidiaries is subject to a limited review at the time of the half-year closing process and to a full audit at year-end, by the external auditors. Twice a year, the Managing Director and the Finance Director of each consolidated subsidiary make a joint commitment as to the true and fair view, reliability and completeness of the financial information by jointly signing a representation letter. Audit assignments in the countries are almost all entrusted to members of the networks of the two Statutory Auditors who, after having jointly performed the review of all the Group’s accounts and the manner in which they were prepared, are responsible for issuing an opinion on the Group’s consolidated financial statements. The Statutory Auditors issue an opinion as to whether the consolidated financial statements and parent company financial statements give a true and fair view. They are kept informed from the early stages of preparation of the financial statements and present an overview of their work to the Group’s accounting and finance managers and to the Audit Committee at the time of the half-year and annual closings. L’Oréal was built on strong Ethical Principles that guide its development. These principles are the foundation of its policies in terms of compliance, responsible innovation, social and societal responsibility, human rights and fundamental freedoms, the environment, the health and the safety of people (EHS) and philanthropic actions. L’Oréal has been a member of the UN Global Compact since 2003 and joined its LEAD group in 2015 which brings together the companies which are the most committed to sustainability. With respect to L’Oréal’s Vigilance Plan, it meets the obligations of the French law of 27 March 2017 on the duty of vigilance for French parent companies and subcontracting companies. It contains reasonable vigilance measures intended to prevent the risk of serious impacts on human rights, fundamental freedoms, health, safety and the environment within the framework of a best efforts obligation. VIGILANCE PLAN 2.8.4. Introduction 2.8.4.1.

It applies to subsidiaries controlled directly or indirectly by L’Oréal (the “Subsidiaries”), as defined by Article L. 233-16 of the French Commercial Code, and to suppliers and subcontractors with which the companies of the Group have an “ongoing commercial relationship”: that is, a direct, ongoing and stable commercial relationship (based on the definition in French case law) and which fall under the risk mapping mentioned in section 2.8.4.3.2. of this Vigilance Plan (hereafter the “Suppliers”). Given the diversity of the business activities of the Subsidiaries and Suppliers, the Vigilance Plan contains reasonable vigilance measures for them which are intended to prevent serious impacts on human rights, fundamental freedoms, health, safety and the environment. These common measures are not exclusive of additional actions implemented by L’Oréal and its Subsidiaries in these same areas, which are described in other chapters of this Document, and namely chapter 3, or additional actions voluntarily implemented by the Suppliers. The actions to support, encourage and prevent serious impacts on human rights, fundamental freedoms, health, safety and the environment contained in this Vigilance Plan constitute reasonable efforts to be implemented by Suppliers and Subsidiaries. These measures cannot guarantee that the risks described in the plan will not occur given that the Group cannot substitute itself for its Suppliers, in particular. The Vigilance Plan contains the rules aiming to prevent the risk of serious impacts on human rights, fundamental freedoms, health, safety of people and the environment resulting from the activities of Subsidiaries and Suppliers (2.8.4.2.). It also includes measures for the effective application of these rules by Subsidiaries and Suppliers as well as regular evaluation procedures to ensure compliance (2.8.4.3.). It includes a whistleblowing mechanism and reporting system (2.8.4.4.), and lastly, a report on the plan’s implementation (2.8.4.5). As part of a continuous improvement approach, the plan will be reviewed on a regular basis by a committee consisting of representatives of the Office of the Chief Ethics Officer, the Operations Department (EHS, Purchasing), the Human Resources Department, the Risk Management and Compliance Department, the Societal and Environmental Responsibility Department and the Legal Department. Applicable rules 2.8.4.2. The Subsidiaries and Suppliers must comply with the applicable local legislation and the minimum common core of rules listed below (the “Applicable Rules”) in order to prevent the risk of serious impacts on human rights, fundamental freedoms, health, safety and the environment. When local legislation is stricter than the Applicable Rules, the local legislation must take precedence. If, on the other hand, the Applicable Rules provide for stricter standards, the Applicable Rules must take precedence unless they result in an illegal activity.

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